The home’s changing role in family finances

Home Ownership Matters

The National Association of Realtors® new public awareness campaign, Home Ownership Matters, points out why homeownership remains vital to people and communities. Help spread the word.

ST. CHARLES, Mo. – Jan. 31, 2011 – Homeownership used to be the bedrock of the American dream, but the economic storm and its lasting effects have radically changed how everyone – no matter what stage of life they’re in – looks at their home.

Many potential homebuyers are now hesitating, taking a closer look at their options. “People are starting to realize that the American dream of homeownership is not right for everyone,” Kim McGrigg, community manager at Money Management International, a non-profit consumer credit counseling service.

And those who already own homes may have hit a snag or readjusted their expectations. Five years ago, as a young married couple, Joe and Cheryl Shaw bought a charming historic home in St. Charles, Mo. They have a 9-month-old daughter and a 3-year-old son. They want to have more children, but the home is too small.

Unfortunately, they paid $222,000 for the home and still owe $203,000. Its estimated value is now only about $185,000.

“We are outgrowing the house, and are ready to move on,” says Joe Shaw, 40, who is an assistant principal in the Francis Howell School District. “But we’re in the hole, so much so that I’m not sure that we can afford to move on.”

A hole in retirement plans

The Shaws are in better shape than homeowners who have lost their homes to foreclosure. And many other families can no longer count on their home value as part of their retirement nest egg.

Nolan Heiter, a business systems analyst at SunTrust Bank in Richmond, Va., says that his and his wife’s retirement plan always had included their home equity. That has to be adjusted now because the home’s value has dropped.

“Our vision had always been that we’d be able to sell the house and get enough out of it to pay cash for a smaller retirement home and have no mortgage,” says Heiter, who is now nearly 50 and doesn’t think the value will turn around before he retires. “We may be facing a situation where we have to use some of our retirement income to pay for a mortgage.”

Even those who can easily afford a home are rethinking their dreams. The McMansion era may be on its way out. Homes are shrinking: The median size of single-family homes declined from its peak of 2,268 square feet in 2006 to 2,100, according to a study based on Census Bureau 2009 statistics by the National Association of Home Builders.

At the same time, multigenerational households are making a comeback. In 2008, a record 16.1 percent of the U.S. population lived in extended families, with at least two adult generations or a grandparent and at least one other generation, a Pew Research Center found. That is up from 12 percent in 1980.

That increase, in part, is because many unemployed adult children are moving back home with their parents. And large family homes are more available to them because many parents are not able to sell them and move to retirement condos.

“There may be a multigenerational household for a period of time until the financial situation changes and is on more solid ground,” says Elinor Ginzler, AARP senior vice president. But some owners are choosing to live in an extended family.

About two years ago, when home prices were going down, Dan and Lauri Pratt sold their home in Kaysville, Utah, and bought a larger home in nearby Farmington. It had a large walkout basement, which they have turned into a small apartment for one of their sons, who is still going to college and is married and has a baby. “One reason for the basement was that it would help them save some money on rent and utilities,” says Dan, 51, a construction manager. “And my wife is able to watch our granddaughter without the hassle of dropping her off and paying for day care.” Pratt expects the apartment could be used again for some of their four younger children or his mother-in-law.

The risks of homeownership

Even though it’s a buyer’s market, a growing number of people are deciding to rent. Some have no choice because they do not qualify for a mortgage, while others don’t want homeownership. In the third quarter of 2010, 59 percent of renters said they were more likely to continue to rent in their next move, vs. 54 percent in January, a Fannie Mae study about homeownership found.

The housing crisis has shown that owning a home comes with risk. “Many who bought homes as investments have gotten quite burned on that,” says Eleanor Blayney, consumer advocate for Certified Financial Planner Board of Standards.

The changes are not only related to the economic crisis. Some Americans are reinventing their homes to be more energy efficient. Others are looking for ways to make their existing homes safe and livable. About one-third of Americans 45 and older said they have made changes to their current home so they could stay longer, the AARP survey found.

Even when the economy improves, home buying may not return to normal. “We need to rethink housing in the 21st century,” Blayney says. People should always remember that there is a potential downside as well as an upside. And homes are not a piggy bank. So people should not assume their home value will help pay for their children’s college education or their retirement.

“It’s a whole new ballgame,” says Sid Davis, a real estate broker and author of A Survival Guide for Buying a Home.

© Copyright 2011 USA TODAY

IRS app lets you check refund status

WASHINGTON – Jan. 26, 2011 – The IRS unveiled a smartphone app Monday that will let taxpayers check the status of their tax refunds and get other information about their tax returns. The app, IRS2Go, can be downloaded for free on iPhones and Androids, the IRS said.

Taxpayers will need to provide some basic information to check the status of their refund on the app. They’ll need to enter their Social Security number, which will be masked and encrypted for security purposes, the IRS said. After that, they’ll need to select the filing status they used on their tax return and enter the amount of refund they expect to receive.

For taxpayers who e-file, the refund function of the smartphone app will work within about 72 hours after they receive an e-mail acknowledgment from the IRS confirming receipt of their return. Taxpayers who file paper tax returns will need to wait three to four weeks to check their refund status, the IRS said.

App users can also sign up to receive daily tax tips from the IRS via e-mail.

Earlier this month, TurboTax, the nation’s largest tax software provider, released a mobile application that allows taxpayers who file a 1040EZ to prepare and file their federal and state income taxes on their smartphones. Customers can download the SnapTax app for free but will have to pay $14.99 to file their tax returns.

“This phone app is a first step for us,” IRS Commissioner Doug Shulman said. “We will look for additional ways to expand and refine our use of smartphones and other new technologies to help meet the needs of taxpayers.”

© Copyright 2011 USA TODAY

Buyer tips for foreclosures
MARCO ISLAND, Fla. – Jan. 24, 2011 – The McCarty Group, a Florida real estate team specializing in Marco Island properties, compiled five tips to help buyers seeking a foreclosure in virtually all U.S. markets.

Mike and Wendy McCarty of Keller Williams Realty say while buyers have heard that there are many foreclosures on the market, most don’t understand these practical rules they can follow.

1. Work with an agent who has access to foreclosure information. Many homebuyers assume that all agents have access to foreclosure listings. It’s important to ask.

2. While short sales can be bargains, they also can take a lot longer than bank-owned properties. Some banks will negotiate in a timely manner on short sales but most will prioritize properties they have already repossessed.

3. Always offer less than the asking price. Asset managers responsible for liquidating bank-owned Marco Island condos, for example, are often willing to consider a lower offer.

4. Ask the bank to pay your closing costs. The worst that can happen is that they say no. Sometimes buyers are surprised to find that banks can be quite accommodating.

5. Get pre-approved from the right bank. When making an offer on a short sale, it’s often strategically helpful to be pre-approved by the same bank. During negotiations, this may tip the scales in your favor.

Source: The McCarty Group

Related Topics: Buyer services

Floridians complain most about BoA, Chase

TALLAHASSEE, Fla. – Jan. 20, 2011 – Bank of America and JP-Morgan Chase topped the list of complaints against banks filed by Floridians in 2010, an analysis of state data indicates.

The two megabanks accounted for about 25 percent of all financial institution complaints in the Sunshine State, said Miami economist and bank consultant Ken Thomas, who reviewed three years’ worth of data from the Florida Division of Financial Institutions for the St. Petersburg Times.

In the article published Monday, Thomas said he was surprised complaints about Bank of America rose in each of the past two years, while the total number of bank complaints in Florida dropped 25 percent from 2009 to 2010. In 2008, Bank of America accounted for slightly more than 12 percent of all complaints statewide; last year, its share rose to 16.5 percent of all complaints.

JPMorgan Chase has less than 3 percent of deposits in Florida, yet represented nearly 9 percent of complaints, Thomas said.

Mortgage disputes were the most common complaints against financial institutions across Florida in 2010, the analysis indicated.

“The fact is that some financial institutions do a better job of serving customers than others,” he said. “Those having financial or other difficulties often cut back on employees and customer service. Even the strongest banks, however, can have many complaints if they are not serving their customers well.”

Copyright © United Press International 2011

Foreclosure means not leaving home for 673 days

 TAMPA – Jan. 19, 2011 – Tampa Bay homeowners can get away with not paying their mortgage payments for about 285 days before lenders even begin to take the house back.

And if you think that’s a long time, get this: it takes about 673 days before the house is sold and the homeowner kicked out, according to data compiled by LPS Applied Analytics, which provides technology and data to the mortgage industry.

That puts the Tampa-St. Petersburg-Clearwater metro area near the top of the list for states that are slow to initiate foreclose. The Bay area is behind Maryland, Massachusetts, New York and California.

It’s no secret that Florida is nowhere near emerging from the real estate downturn. But data like this show just how clogged local courts are. The data also bring up some thorny issues for economists and industry onlookers who say the market won’t recover until a bulk of the distressed homes are sold.

“This data reflects that our system is overwhelmed,” said Mike Larson, a real estate analyst with Weiss Research. “It also reflects the pressure from government and others to come up with foreclosure alternatives. That’s good or bad, depending on your perspective.”

One of the reasons it takes so long to foreclosure on Florida homes is because a judge must sign off on foreclosures in the Sunshine State. Courts are working through a backlog of tens of thousands of pending foreclosures. Some lenders halted or dramatically slowed foreclosure proceedings, amid government programs to keep struggling Americans in their homes.

Some, such as the Florida Bankers Association, have tried in the past to change Florida’s foreclosure process so a judge doesn’t have to sign off on foreclosures. Supporters say it would help improve the economy faster.

However, that could create even more problems, say consumer groups, who point to recent cases involving sloppy practices, even fraud, by lenders. At least with a judge, they say, there is some opportunity for protection for struggling homeowners.

Alex Sanchez, president and chief executive for the Florida Bankers Association, supported a legislative bill last spring that would have allowed lenders to foreclose without judge approval.

“I have Floridians emailing me, asking that we foreclose on their neighbors’ empty home faster,” Sanchez said. “They don’t want to live by the eyesore. Being a non-judicial state would streamline the process.”

There are 30 states that have a non-judicial foreclosure process, allowing lenders to foreclose on properties in as little as a month.

Under Florida law, a lender can take back a home only if it files a foreclosure lawsuit and is granted one from a judge. Because of a backlog of nearly 500,000 foreclosures, the process can take several months to a year or longer.

Last year’s proposed bill, which was sponsored by Tom Grady, R-Naples, would have changed that by allowing lenders to skip legal proceedings unless the borrower requests that the foreclosure go through the courts. Lenders could have foreclosed in as little as 90 days.

The controversial bill, however, hit such resistance from foreclosure defense attorneys and consumer groups that it didn’t get very far.

“The faster we can get these properties rehabilitated and sold to someone who will clean them up, the faster our economy will recover,” Sanchez said.

Lenders foreclosing faster wouldn’t help, said Mark Stopa, a Tampa foreclosure defense attorney. “Banks want to get the judgment so they can write it off their books, but they don’t want to take title and sell the home,” Stopa said. “The LPS data shows how long it takes before they sell homes.

“I’ve seen so many homeowners move out because they lose their case and then the bank cancels the sale, and the home stays empty.”

Copyright © 2011 Tampa Tribune, Fla

Tracing the signs of foreclosure traps

PALM BEACH GARDENS, Fla. – Jan. 18, 2011 – Somewhere, presumably Georgia, lives a woman named Linda Green. According to investigators, her signature – and variations of it – appears on hundreds of thousands of questionable mortgage documents.

Linda Green has an impressive resume. She has been a vice president of at least 14 banks and mortgage companies, including Wells Fargo and Bank of America. The documents with her signature are called mortgage assignments. By signing, she attests to the true owner of a mortgage, which proves that a bank has the right to foreclose on a home.

One of those homes belongs to Lynn Szymoniak, a Palm Beach Gardens lawyer who specializes in white-collar crime. Szymoniak, 61, has ferreted out economic crimes for years and federal prosecutors have called her as an expert witness in four trials. In July 2008, after negotiations with her lender over an increase to her adjustable-rate mortgage failed, she received foreclosure papers on her home.

What she saw “made no sense.”

The company servicing her mortgage was in Dallas. Linda Green was in Alpharetta, Ga. Szymoniak launched an investigation of her own foreclosure.

“I did what I often do in cases,” Szymoniak said. “I find other documents that have been signed by the same person.” What she saw at the Palm Beach County Courthouse made her suspicious. She expanded her investigation of Linda Green to other counties: “Then I hit the mother lode.”

Linda Green’s signature varied widely in thousands of documents Szymoniak found. Szymoniak had uncovered the practice of robo-signing: employees at banks and mortgage servicing companies who sign sworn affidavits without any knowledge of the case. Linda Green is believed to be among the most common robo-signatures of them all.

“I have had training in this, but you don’t need training,” Szymoniak said. “It’s obvious to anyone that many people are signing for Linda Green.”

Lender Process Services Inc. confirmed that Green worked for its defunct subsidiary, Docx LLC, and does not now work for LPS. The Florida Attorney General’s Office is investigating LPS in connection with documents that “appear to be forged, incorrectly and illegally executed and false and misleading.”

Often, as in Szymoniak’s case, Green’s mortgage assignment was dated months after the case was filed, bringing into question the true owner of the note when the foreclosure proceedings began. Another document in her case was a copy of what appeared to be the top of her mortgage pasted to the bottom of another document.

As Szymoniak sees it, she has been the victim of at least four foreclosure schemes: Robo-signing. Forgery. Bogus documents. Fraud.

Szymoniak believes legions of distressed homeowners are being victimized by other methods that are tough to uncover and even tougher to avoid.

Indeed, 43,428 homes in Palm Beach County were in some stage of foreclosure last year, according to RealtyTrac.

“I wasn’t surprised,” former Florida Attorney General Bill McCollum said about the breadth, quantity and ingenuity of foreclosure fraud reported throughout the state. Since 2008, the Florida Attorney General’s Office has launched more than 150 mortgage fraud investigations. Seventy remain open, and more than 50 companies are still under review.

The bulk of the attorney general’s ongoing investigations involve consultants and companies that collect upfront fees to assist with loan modifications. Upfront fees are illegal. Fees may be collected only after services are completed.

“It’s been clear for some time that there are people out there who are very creative,” McCollum said. “These people were associated with the industry in good times, and they know how to make money in this.”

Another explanation for the magnitude of the fraud is that some participants – the robo-signers and notaries – may not even be aware they are participating, said William Kovacic, who serves on the Federal Trade Commission and has studied the psychology of white-collar criminals.

“If the true nature were revealed in an unvarnished way, a number of people would refuse to participate,” Kovacic said. “Part of the effort of the people who orchestrate these frauds is to assure the subordinates that what is taking place is legitimate.”

Even when they learn of the scheme, they are so far removed from the victim that they feel little remorse or responsibility, Kovacic said

“The most clever schemes actually provide some useful service to the victim. Now and then they do reduce a debt that is owed or they do provide a forbearance on the loan,” Kovacic said. For the low-level but essential participants in the scheme, the rare act of goodwill becomes “an element of legitimacy ‘Ah, we’re not so bad.’”

The complexity of foreclosure makes it difficult for distressed homeowners to recognize something is wrong. Even the most benign task can be a fraud. Take the case of Earnest Harpster, a Pasco County homeowner facing foreclosure in 2010.

Harpster’s attorney discovered the mortgage assignment had been notarized with a stamp that wasn’t issued until five months later. The judge found that a fraud had been “intentionally perpetrated on the court” and dismissed the case, gave Harpster his home and barred the bank from refiling for foreclosure. She ordered the bank to pay Harpster’s attorney fees.

Astute consumer advocates have found mortgages assigned to and from companies that are no longer in business, documents with impossible dates, such as 9/9/9999, and nonexistent individuals, such “A bad bene” and “Bogus Assignee.”

Meanwhile, Szymoniak is intent on finding Linda Green. Her attorney, Mark Cullen, subpoenaed Green’s supervisor at LPS for a deposition. On Thursday, an attorney for LPS persuaded a judge to issue a temporary protective order, arguing that Szymoniak was on a “fishing expedition.”

“We are going to win this and take her deposition,” Szymoniak said. “You know Linda Green was also the most commonly used name in the Nigerian e-mail fraud scheme a few years ago. That just struck me as kind of funny.”

Copyright © 2011 The Palm Beach Post

Formal living rooms and mansions on way out

ORLANDO, Fla. – Jan. 18, 2011 – The American home of the future will be smaller, more energy efficient and apt to have a combined great room-kitchen area, says a survey Thursday by the National Association of Home Builders.

Single-family homes, after ballooning in size for decades, began shrinking in 2008 and will continue that downward trend for years, says the survey released at the trade group’s annual International Builders Show.

Completed new homes, only 1,500 square feet in 1970, peaked at an average of 2,520 square feet in 2007 but fell to 2,377 square feet last year, the NAHB reports, citing U.S. Census Bureau data. Their average size will drop to 2,150 square feet in 2015, according to its survey of 238 builders, architects, manufacturers and designers.

Part of the downsizing may be temporary, due to recession-pinched pocketbooks, but several trends such as the “huge desire to keep energy costs down” suggest it will continue in a stronger economy, NAHB’s Rose Quint says.

“Demographics are long term on the side of smaller homes,” she says, pointing to the increasing number of young adults seeking energy efficiency and senior citizens wanting less space. She cites Census data that show people 65 and older will account for 20 percent of the U.S. population in 2050, up from 13 percent last year.

“Let’s buy what we need,” is a common new attitude, Quint says, noting consumers are viewing homes less as long-term investments and more as places to live than they did in the housing boom.

Yet Americans, after two years of belt-tightening, are starting to dream a bit bigger, says Jill Waage of Better Homes and Gardens, which Thursday released a December survey of 2,000 of its readers. They now say they want a home with a median square footage of 1,914 square feet, up slightly from 1,864 square feet last year.

“They are dreaming again but their dreams are definitely reality-based,” Waage says. In her survey, 74 percent of consumers say affordability remains a high priority as they look to remodel or buy a home. So, too, does energy efficiency, cited by 68 percent.

NAHB reports that the average size of new U.S. homes started but not completed last year actually increased a tad – 14 square feet – from 2009. Its survey notes the U.S. increase was due almost entirely to changes in the South.

“By no means is it a national phenomenon,” says Quint, an economics researcher.

In NAHB’s survey, 52 percent of participants say they plan to build smaller homes in 2011, compared with 2010, and 59 percent plan lower-priced models. Only 7 percent say they plan to build larger or higher-priced homes.

As for the near future, in 2015, 74 percent say single-family homes will be smaller and 68 percent say they’ll have more “green” features such as low-flow faucets, dual-flush toilets, better windows and whole-house Energy Star efficiency ratings.

Losing favor is the formal living room, which 82 percent say will either vanish or merge with other spaces in 2015. In contrast, survey respondents say a great room combined with a kitchen will “very likely” be part of the average new home.

© Copyright 2011 USA TODAY